Constant innovation is a requirement for all businesses in food and supplement manufacturing. For many successful products, coming up with a new package design or new dosage form is sufficient to innovate them. However, portfolio expansion, and thus new product development, is also crucial, especially in a market where changing regulations often mean that adjustments of the formulation or even a change of category may become necessary.

New product development usually starts at the desk, ideally based on market research and scientific evaluation of possible product ingredients. By the time a cost-of-goods estimation is required, though, the question of who to partner with comes up, and the project moves into the real world. This step should be a scrutinized process, since innovation is as much about developing a product as it is about finding a partner. Most importantly, both parties need to have the same vision.

Match-Making
Food business operators looking for partners are generally limited to their networks. Ingredient manufacturers market their products via trade shows and Internet information, hoping to reach potential business partners in this way. By the same token, end product manufacturers that have a product concept but no ingredients yet are often dependent on the happy circumstance of stumbling upon the suitable ingredient-manufacturing partners via their in-house information channels or at trade shows. Finished product manufacturers looking for distribution partners are faced with the time-consuming process of offering their products to prospective partners in their network.

Since this is not exactly a new or obscure problem, partner finding is a business within the industry. There are many business-partnering platforms in the pharmaceutical industry that are mostly focused on mainstream medicinal products (Rx/OTC). For natural products, the number of companies offering this service is extremely small.

A number of companies offer this service exclusively, occasionally specializing in certain categories of the food industry such as food/dietary supplements. The partner-finding process can be an online process using databases for products and brands where potential licensors and licensees can input their products or brands. These processes usually accept any business opportunity that pays to be advertised on their website or database, making the partner finding activity quite time consuming, if commodity products are to be avoided. While these products play an important role in the industry, clients enrolling in a partner-finding platform usually expect to end up with products with added value.

Quality Tips
The quality of this kind of service depends on a number of factors.

A good partner-finding service should be able to offer assistance in all kinds of situations, like licensing in or out, finding distribution partners, or in case a divestment is required.

The products in the database, if one is used, should be carefully screened. Finding, after the fact, that a bad deal has been made will diminish trust in the respective service provider. Thus, high quality of products up for licensing is key to the entire endeavor.

A broad range of information in the database makes matchmaking more efficient. Including information on special IP, health claims, regulatory compliance (possibly in various EU markets) all can help speed up the process of finding the ideal partner. The product concepts should be solid, with definitive added values.

Hands-On Customization
Ideally, though, the partner-finding process should not be entirely automated. There are many steps that should be taken under the supervision of experienced industry insiders, especially if a potential partner’s requirements are a little bit outside of the norm.

An industry insider can design custom-made blueprints for special requirements and nearly any objective. In some cases, hands-on scouting for just the right fit may be required, be it for certain ingredients or products, or even for special technological fits. This too can only be done effectively if experience as well as a versatile network within the respective industry branch is in place.

The experts’ work doesn’t stop once a potential match has been found. First, the quality of the match must be evaluated. Service providers should not just act as matchmakers; they should also have the ability to support the client through the whole commercial transaction (e.g., due diligence, regulatory intelligence, market analysis). Whatever pitfall you don’t spot at an early stage of the business transaction will probably come up at a later stage.

A neutral third party present during the negotiations, either just coordinating and documenting the meetings or actively managing the project, can take a great deal of pressure and responsibility off the partners. Negotiations are not only based on cold figures; sometimes they can be very emotional, and this leads to frustrations that might end a promising deal before it even begins.

All these tasks can be offered competently by companies that work exclusively in this field. However, consultancies to food business operators such as analyze & realize GmbH are also uniquely suited to this task, since they have, by the very nature of their services, an excellent overview of the business. Currently, there is only one business partner finder for natural health products. This is exclusive to a&r’s MatchMaking Platform.

Joerg Gruenwald
analyze & realize ag

Dr. Joerg Gruenwald is co-founder of analyze & realize GmbH, a specialized business consulting company and CRO in the fields of nutraceuticals, dietary supplements, herbals and functional food, and author of the PDR for Herbal Medicines. He can be reached at analyze & realize GmbH, Waldseeweg 6, 13467 Berlin, Germany; +49-30-40008100; E-mail: jgruenwald@a-r.com; Website: www.analyze-realize.com.

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